In the past three years, the share price of Jyothy Labs Limited (NSE:JYOTHYLAB) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 30 July 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
How Does Total Compensation For Kasaragod Kamath Compare With Other Companies In The Industry?
According to our data, Jyothy Labs Limited has a market capitalization of ₹64b, and paid its CEO total annual compensation worth ₹79m over the year to March 2021. We note that's an increase of 15% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹30m.
On comparing similar companies from the same industry with market caps ranging from ₹30b to ₹119b, we found that the median CEO total compensation was ₹74m. From this we gather that Kasaragod Kamath is paid around the median for CEOs in the industry. Moreover, Kasaragod Kamath also holds ₹505m worth of Jyothy Labs stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. Jyothy Labs pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Jyothy Labs Limited's Growth Numbers
Jyothy Labs Limited's earnings per share (EPS) grew 2.0% per year over the last three years. It achieved revenue growth of 12% over the last year.
This revenue growth could really point to a brighter future. And, while modest, the EPS growth is noticeable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Jyothy Labs Limited Been A Good Investment?
With a three year total loss of 16% for the shareholders, Jyothy Labs Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Jyothy Labs that you should be aware of before investing.
Important note: Jyothy Labs is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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